State Bar of Michigan Judicial Crossroads Task Force BusIness Impact Committee Recommendations 2011

8/7/2019 State Bar of Michigan Judicial Crossroads Task Force BusIness Impact Committee Recommendations 2011

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June 14, 2010

Mr. Barry L. Howard, Co-chairMr. Edward H. Pappas, Co-chairMembers of the Judicial Crossroads Task Force

REPORT OF THE BUSINESS IMPACT COMMITTEE

The Business Impact Committee was tasked to review the ways in which Michigans courtsystem serves the business community and to determine whether there are procedural orstructural changes that would improve the system. Specifically, the goals of the committeeare: (1) to methodically investigate and analyze how the structure and operations of our courtsystem impact the financial viability of Michigan businesses; and (2) to propose to theJudicial Crossroads Task Force procedural or structural reforms that, if implemented, wouldserve to improve the judiciary while strengthening those businesses and, in turn, our stateseconomy. The Committee membership includes leaders from all segments of the legal andbusiness community, including members of the plaintiffs and defense bars, the business andlabor communities, transactional attorneys, and corporate general counsels. Minutes of theBusiness Impact Committee meetings are included in Attachment I for reference.

In order to accomplish this mission, the Business Impact Committee met each month a totalof seven times since November 2009 to perform its work. The committee conducted asurvey of corporate and business attorneys for their feedback regarding issues concerningthe interaction of their businesses or business clients with the Michigans court system.Attachment II contains the results of the survey. The committee also held discussions witha number of experts in business courts, court management and ADR issues. In deliberatingon the business docket proposal, the committee divided into four subcommittees and heldnumerous meetings and discussions via conference call. The committee also conductedresearch in the rules and implementation of business courts within the U.S.

As a result of this effort, the committee has completed its work and provided a

recommendation for the implementation of a specialized business docket in Michigan that isoutlined in significant detail in Attachment III. This recommendation is the primary work ofthis committee and we will be presenting this proposal on June 24, 2010 at the Task Forcemeeting. In addition, Attachment IV is another recommendation to consider changing therules for out-of-state and foreign attorneys to more easily be able to practice in Michigan.

If you have any questions prior to the Task Force meeting on any of our activities orrecommendations, please do not hesitate to call.


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Sincerely,

The Business Impact Committee Co-Chairs:

Diane L. Akers, Bodman LLP, Co-ChairAndrew S. Doctoroff,Honigman Miller Schwartz & Cohn LLP, Co-Chair

Members:

Peter M. Alter, Jaffe Raitt Heuer & Weiss PCCharles E. Barbieri, Foster Swift Collins & Smith PCGeorgi-Ann Bargamian, International Union UAWSteven M. Bieda, Elder & Disability Law Firm PLLCHon. Robert M. Bondy, 52-1 District CourtRockwood W. Bullard III, Bullard Anderson PLCMark J. Burzych, Fahey Schultz Burzych Rhodes PLC

Lynn P. Chard, Institute of Continuing Legal EducationFrancine Cullari, Michigan Family Business Center, U of M-FlintRobert L. Katz, Federal-Mogul CorporationRonald D. Keefe, Kendricks Bordeau Adamini Chilman & Greenlee PCDennis C. Kolenda, Dickinson Wright PLLCRobert S. LaBrant, Michigan Chamber of CommerceElvin C. Lashbrooke, Eli Broad College of Business MSUDavid Graham Leitch, Ford Motor Co VP and General CounselKathleen A. Lang, Dickinson Wright PLLCHon. Richard M. Pajtas, Chief Judge, 33rd Circuit CourtD. Andrew Portinga, Miller Johnson

Nicholas J. Stasevich, Butzel Long PCDouglas A. Van Epps, Office of Dispute ResolutionNorman D. Tucker, Sommers Schwartz PCAlan M. Valade, Honigman Miller Schwartz & Cohn LLPCarl E. Ver Beek, Varnum LLP

Staff Liaisons

Clifford T. Flood, General Counsel, State Bar of MichiganJames C. Horsch, Director of Finance & Administration, State Bar of Michigan


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Business Impact Committee Recommendation

Proposal for the Establishment of a SpecializedBusiness Docket Pilot Program

June 14, 2010

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Table of Contents

I. Executive SummaryII.

Overview and Goals

III. Establishing and Operating Business DocketsA. Establishing Business Docket Pilot ProjectsB. Assignment of CasesC. Cases Eligible for the Business DocketD. Business Docket JudgesE. Operating a Pilot Business DocketF. Business Docket Procedural MechanismsG. Business Docket Funding or Pilot Project FundingH. Phased ImplementationI. Why Businesses Should Support this Proposal

IV. AppendixA. States with a Business Court of Specialized Business DocketB. Business Docket Case EstimatesC. Minority Opinion Creating a Standalone Business CourtD. Questions and Answers


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Executive Summary

The Business Impact Committee of the Judicial Crossroads Task Force has surveyed in-house counsel, interviewed business court and court improvement experts, and studied theexperiences of other states that have implemented a specialized business docket-or business court.

After much deliberation, the committee concluded that the Michigan court system has a significantopportunity to reduce the time it takes for businesses to resolve their legal disputes (especially incomplex matters), improve the quality of the decisions rendered, reduce the cost incurred bybusinesses in getting their legal disputes resolved, and improve the attractiveness of Michigans courtsystem to the business community. To address these issues, the committee is recommending thatthe Michigan Supreme Court establish a three year pilot program for a specialized business docket intwo or three circuits (to include Wayne and Oakland counties). Creating and operating the businessdocket pilot program would notrequire additional funding, and it would employ existing judges whohave been specially selected and are qualified to handle these specialized cases which are primarilybusiness-to-business disputes for amounts of $25,000 or greater. This specialized business docketpilot program would utilize procedures and rules that would expedite resolution of business

disputes. The benefits of a specialized business docket pilot program could potentially be applied tothe entire court system.

The proposal for the specialized business docket is outlined in this report. Appendix Dcontains frequently asked questions and answers concerning this proposal.


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Overview and Goals for Establishing a Specialized Business Docket

The vast majority of judges and lawyers in Michigan are conscientious, ethical, andcompetent. However, a perception exists among businesses that Michigans present system preventsthe timely, cost-effective, and proper resolution of legal disputes - a perception shared by many

judges and attorneys handling business litigation. The perception has developed because of, amongother things: (1) judges who may lack familiarity with complicated or technical factual issues thatoften arise in business disputes; and (2) judges whose sizeable dockets often prevent them fromproactively and efficiently moving pending business litigation matters. These concerns have helpedfoster a widespread perception among businesses that Michigans court system needs to be changed.In a recent survey conducted by the State Bar, a full 81 percent of in-house counsel and commerciallitigators believe that our court system is average or worse compared to other states court systems.

After consulting with judges, attorneys and those who have worked with state businesscourts, the Business Impact Committee of the State Bar Judicial Crossroads Task Force that thecreation of a specialized business docket referred to as a business court in some jurisdictions -

would materially improve the resolution of business litigation and disputes. In proposing thecreation of a business docket, which will be specifically described elsewhere, the committeeendeavors to improve how business disputes are litigated in Michigan. Specifically, the creation ofbusiness dockets within circuit courts will lay the groundwork to ensure that business cases areresolved more expeditiously and less expensively. Just as importantly, a business docket, whichwould be comprised of judges who have both expertise and interest in commercial litigation, wouldincrease the likelihood that business disputes are resolved in accordance with applicable legalstandards. Such a result would make litigation less unpredictable and allow businesses to morereliably plan for the future. Finally, the committee believes that the creation of a specializedbusiness docket would help create an environment more attractive to large and small businesses and would symbolize that Michigan is now committed to pursuing new strategies calculated to retainjobs and grow the states economy.

There are several reasons why achieving these goals, particularly through establishing abusiness docket, is important. First, and most obviously, cost-effectiveness, timeliness, andprincipled dispute resolution are inherent goals that stand alone. If those goals can be achieved inany context, even a narrow one, then they should be pursued - the legal professions obligations tothe citizens of this state so dictate. Second, by adopting reforms calculated to improve the mannerin which business disputes are resolved, the existence of a business docket would indirectly benefitthe entire court system. Specifically, it would serve as an exemplar of reform; many of the policiessuccessfully adopted by it could be exported to, and applied in, other cases that would not be part ofthe business docket. Of course, parties who would not appear in cases pending on the businessdocket are every bit as important as businesses. Thus, another imperative of the Business Impact

Committee is ensuring that reform does not diminish the quality, efficiency, and effectiveness of therest of the court system.

However, the committee does not view the creation of a business docket as a zero-sumendeavor. The reforms adopted with the creation of a business docket need not disadvantage otherparts of Michigans court system. On the contrary, committee members anticipate that reformsrelating to the business docket ultimately could be embraced throughout the court system, thereby


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elevating the quality of justice for all. Further, judges who do not preside over business docket caseswould preside over a less diverse docket, thereby gaining expertise in other areas of the law.

It is likely, and it is hoped, that if a specialized business docket were established, businesses would view Michigans court system more favorably. The State Bar poll establishes that sizeable

majorities of respondents agree with many core features of a business docket, including assigningcases involving business issues to designated judges who have an expertise and interest incommercial litigation.

The Business Impact Committee recognizes that many stakeholders in our court system areskeptical about the need for or utility of a specialized business docket. However, jurisdictions inseventeen states have adopted business courts in one form or another (see Appendix A). No statethat has adopted a specialized business docket has subsequently discontinued it. In the states inwhich these have been created, business dockets are popular and have been embraced not only bythe business community, but also by both plaintiff and defense attorneys. In Michigan, a specializedbusiness docket would be part of a decades-long evolution that has increasingly seen the creation ofspecialized courts to address specific areas of law like workers compensation, probate matters, and

family law matters.

In summary, the Business Impact Committee believes the business docket proposal willachieve the following goals, which will be closely evaluated during a pilot phase to ensure that thecourt performs as expected: (1) reducing the time it takes for businesses to resolve their legaldisputes, especially in complex matters; (2) improving the quality of the decisions rendered; (3)reducing the cost incurred by businesses in getting their legal disputes resolved; (4) improving theattractiveness of Michigans court system to the business community, thereby encouraging currentbusinesses to remain in, and new businesses to locate to Michigan, and (5) developing a body of caselaw on business law issues at the trial court level that will be persuasive tools for other trial judges.


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Proposal for a Pilot Business Docket of the Circuit Court

I. ESTABLISHING A PILOT BUSINESS DOCKET A. Pilot circuits. Pilot business dockets will be established in Wayne and Oakland

Circuit Courts because those circuits probably have significant business litigation and enough judgesso that two or three could be designated as business court judges. The Supreme Court may establisha pilot business court in more than two circuits at its discretion.

B. Term. The initial term will be three years. At the end of that time, the pilot businesscourts will be evaluated by reviewing the number of cases and time of resolution in the businesscourt compared to the general civil division.

C. User survey. Litigants, counsel, and judges will be surveyed to determine theirsatisfaction with the system and whether they think it has saved time and money during the three-year term.

D. Oversight and evaluation. An oversight body shall be appointed from members ofthe bench and bar to prepare written protocols to evaluate the success of the pilot specializedbusiness docket. After the project begins, this committee shall annually present a written report ofthe pilots progress.

II. ASSIGNING CASES TO PILOT BUSINESS DOCKET A. The Michigan Supreme Court should amend local rules in each pilot circuit court to

include a local rule similar to MCR 8.117(A), Circuit Court Case Type Code List. The new local rulewould include a subparagraph entitled Business Docket. (The Supreme Court could also amend MCR8.117(B), the comparable district court provision, to add subparagraph (6) for a business docket in

the district court.)B. The Michigan Supreme Court should define which cases will be decided in the

business docket. The committees recommendations for eligible cases for the business docket areidentified in section III below.

C. When a case is filed, the plaintiff identifies the case with business court code. Astandard set of case type codes would be developed by the SCAO for the cases to be assigned to thebusiness docket. Such codes should be as finely drawn as possible to obtain useful statisticalinformation. The committee recommends that the types of cases eligible for assignment to thebusiness docket would be in three categories discussed below: Category I (Categorically Assigned),Category II (Assigned by Agreement), and Category III (Excluded Cases). The categories and thecases recommended to be assigned to each follow. The case is then automatically assigned by lot to

a business docket judge through a local rule similar to MCR 8.111. There is no additional fee forfiling a case that goes into the business docket.

D. The defendant could be required to confirm in its answer that the case meets thecriteria for the business court or this could be jurisdictional to ensure that only real business docketcases get into the business docket. There would be no cost to this kind of check on the plaintiffsdesignation.

E. At the initial status conference, suitability for business court resolution will be


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reviewed with removal, if appropriate, to the general civil division thereafter. There is no additionalcost to this kind of check.

F. Either party may file a motion to remove a case from the business docket to thegeneral civil division on the ground that the case does not meet the criteria for the business docket.The moving party pays the normal motion fee.

III. CASES ELIGIBLE FOR A BUSINESS DOCKETA. The amount in controversy should be the same as the circuit court, presently

$25,000.

B. Case Types1. Category I (Categorically Assigned). The following types of cases, whether

qualifying by complaint, counter-claim, cross-claim, or third-party complaint (see MCR2.111(B)), shallbe assigned to the business docket and identified as Category I. However,

any case assigned to the business docket as a mandatory business case shall be subject toremoval to the general civil docket by the business docket judge for good cause, by motionof a party, or sua sponte.

(a) Business governance/internal affairs, including shareholder derivativeand oppression suits.

(b) Business torts (with business plaintiff and business defendants).(c) Antitrust law(d) Intellectual property.(e) Trade secrets between businesses.(f) Securities laws.(g) Commercial real estate cases between businesses.

(h) Business-to-business disputes (including contracts, constructiondisputes, and employment matters).

(i) State tax commission appeals.(j) Environmental law (with business plaintiff or business defendant).(k) Environmental insurance.(l) Matters subject to compulsory arbitration if involving Category I

subject.

2. Category II (Assigned by Agreement). The following types of cases maybeaccepted to the business docket by mutual agreement of the parties and are identified asCategory II. (These types of cases may be thought of as opt-in matters.) These cases

could be assigned if there is room on the docket and if the parties on both sides agree toassignment to the business docket.

(a) Collection of professional fees.(b) Commercial insurance indemnification claims.(c) Malpractice claims brought by businesses against attorneys,

accountants, architects, or other nonmedical professionals.


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(d) Commercial insurance coverage disputes.(e) Commercial insurance declaratory judgments.(f) Employment law matters, including employer/employee

noncompetition, nondisclosure, nonsolicitation agreements,discrimination claims, and wrongful termination.

(g) Matters subject to compulsory arbitration if involving Category IIsubject.(h) Nonviolent business - related felony matters (white - collar crime)

on petition of either party.(i) Individual business owner versus non individual- owned business.

3. Category III (Excluded Cases). All other cases are excludedfrom the businessdocket by way of example only, and not limited to:

(a) Products liability(b) Personal injury and wrongful death(c) Medical malpractice

(d) Commercial landlord versus consumer tenant(e) Noncommercial real estate matters(f) Actions by consumers against businesses and businesses against

consumers(g) Matters subject to compulsory arbitration if involving category III

subject(h) Occupational health and safety matters(i) Commercial class actions, proceedings to enforce a judgment

IV. PILOT BUSINESS DOCKET JUDGES A. Selection. The Michigan Supreme Court will select the pilot business docket judge(s)

in each circuit court selected for a pilot business docket. Current or elected judges would volunteerfor assignment to the pilot business docket. The number of business docket judges would dependon the size of the circuit; it should be small enough to ensure some predictability and uniformity inthe decisions but large enough to preserve the idea of assignment by lot under MCR 8.111(B).

For example, there may be two or three business docket judges in Wayne or OaklandCounty. However, this determination should be made after a more careful review of the anticipatedvolume of cases that would meet the criteria.

B. Criteria. Criteria would include the judges interest in serving on the business docket,case management skills, and knowledge and expertise in business issues. This proposal assumesthere would be enough qualified volunteers to appoint two or three business docket judges in the

pilot circuits. If not, the Supreme Court should identify desirable candidates, who should be askedto serve for three years. A judge should not be required to serve as a business docket judge over hisor her objection.

C. Overall docket control. MCR 8.111 should also be amended to give the chief judgethe ability to reassign cases to correct docket control problems that result from assigning cases tothe business docket, similar to the chief judges power under MCR 8.111(D)(4). That way, business


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docket judges would start with normal dockets, which could be reduced as their business docketsincrease. It would ensure that all judges in the circuit have a fair share of the caseload.

When assigning cases to control the docket, the chief judge should take into considerationthe nature of the duties of the business docket judge, including increased requirements for courtconferences, written opinions, speedy hearings outside the normal motion process, and other

matters that may increase the actual workload of the business docket judge, regardless of the numberof cases actually logged or pending on the business docket.D. Term. Assignment as a business docket judge would last until the judges term

expires or the judge resigns or is removed. Assignment would not rotate among judges.E. Training. The American College of Business Court Judges provides free education

for business docket or business court judges. This is generally done on the East Coast, however, so,if the state wants the business docket judges to participate in training, it would incur the travel andlodging expenses for the business docket judges.

V. OPERATING THE PILOT BUSINESS DOCKETSDiscretion will be given to the business docket judges to tailor procedures to each case.

Following are suggestions for expedited case management that may be incorporated into thebusiness docket. See also Business Docket Procedural Mechanisms, in section VI.

A. Initial pretrial disclosures. The parties will make initial pretrial disclosures within 28days after pleadings are concluded (i.e., answers to third- party complaints and counter complaints, ifany, are filed). This will include information disclosed in federal rules; production of keydocuments; identity of witnesses; calculation of damages; issues likely to be resolved on motion;issues ready for resolution, if any; key case law; and prior decisions from the business courtapplicable to the case, if any.

B. Joint pretrial report. Counsel have 28 days to review each others disclosures and arejointly responsible for preparing and submitting a pretrial report. Contents include:

1. Description of claims and defenses, including the facts that constitute them,not just the labels. The parties can identify witnesses and attach key documents for thejudges review.

2. Discovery necessary. Although not binding, each side should state thegeneral nature of its anticipated discovery and how long it will take.

3. Issues with initial disclosures, if any.4. Case law the parties would like the judge to consider.5. Issues the parties believe are ready for resolution. In many business cases,

the facts are not in dispute and the only issue is how the law will be applied to those facts.An early legal ruling by the business docket judge may allow the parties to end their dispute.

6. Prior settlement discussions and current status; existence of arbitration and

mediation agreements, if any; ADR possibilities considered and proposed; and barriers toresolution, financial and otherwise.7. Technological capabilities of counsel and client to participate in

teleconferences with the court, and location of clients and ability to appear for courtconferences.

8. Whether a court-appointed expert would assist resolution.


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C. Initial court conference. Forty-two days after pleadings are concluded, the court willhold an initial conference attended by counsel only, although clients may attend at their option.Matters addressed will include:

1. Whether the case has been properly assigned to the business court.2. Whether some type of ADR is suitable and, if so, when and what type should

be employed.3. Issues that are ready for resolution by the court.4. Anything raised in the joint pretrial report.5. Whether a meeting with the judge attended by clients would be appropriate.6. Schedule for the litigation.7. Discovery issues and the necessity of any protective orders.8. Use of technology, consent to service by email, and motion hearings and

court conferences via conference call or video conference9. When counsel expect to be able to report back to court regarding progress

on resolving/litigating case.10. Whether parties will consent to expedited motion hearing time (which court

can order for good cause in any event under MCR 2.119).

11. Prior business court decisions the parties should be aware of.D. Case management plan. Business docket judge prepares detailed case management

plan based on initial court conference and issues to parties. This includes requirements for interimpretrial reports by counsel and status conference(s) with the court, possibly attended by clients. Alsoincludes issues or claims/defenses that can be eliminated from the case at various points.

E. Use of technology. Electronic filing and service will be encouraged wheneverpossible. Clients who are unable to appear for court proceedings will be permitted to participatefrom remote locations through technological means. Technology will be used to enhance efficiency.

F. Trial. Jury trial right is preserved and, if demanded, proceeds in the same fashion asin the general civil division, as does a bench trial.

G. Appeal. Appeal is to the Court of Appeals, as with any other circuit court case.

VI. BUSINESS DOCKET PROCEDURAL MECHANISMSIn addition to section V above, the committee recommends the following procedures for

the business docket:

A. The Michigan Supreme Court should promulgate written rules for the businessdocket.

B. The business dockets rules should apply only to cases pending before the businessdocket during the pilot period. The business docket rules should be flexible and confirm the

authority of the business docket judges to craft creative and innovative procedures, policies, andplans to effectively manage, expedite, and resolve business disputes in Michigan.C. The business docket rules should supplement the MCRs, including specifically the

MCRs dealing with case management and ADR. See MCRs 2.401, 2.403, 2.404, 2.410, and 2.411.In cases of conflict between the MCRs and the business docket rules, the business docket rulesshould govern for cases in the business docket.

D. The parties should have the constitutional right to jury trials.


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E. The business docket rules should allow (but not require) the business docket judgesto experiment and create different tracks for complex and non-complex cases. For example,the business docket rules should empower judges to limit discovery and time periods in less complexbusiness cases, while permitting more discovery and longer time periods to resolve complex businesscases or cases involving large sums of money (for example, cases in which a party is seeking more

than $1 million in damages).F. The business docket rules should require early (for example, within 30 to 45 days ofthe filing of the answer to a complaint) and frequent judicial intervention (via scheduling, status, andsettlement conferences) in all cases filed during the pilot period.

G. Business docket judges should be required to use case management orders toeffectively and creatively manage all complex and non-complex Category I and Category IIcases filed with the business docket.

H. Business docket case management orders should, inter alia, address (1) discovery,including the number of lay and expert witness depositions, the number of interrogatories andrequests for admissions, and the production of electronic documents and allowing disputeddiscovery motions to be decided by telephonic hearings and conferences without legal briefs; (2) useof voluntary and mandatory ADR procedures; (3) use of frequent scheduling, status, and settlement

conferences with the judges (and not with the judges clerks or staff); (4) early resolution ofdispositive motions; (5) early bench and jury trials; and (6) the use of telephonic conferences, theInternet, and other technologies to expedite and effectively manage business cases.

I. The business docket rules will provide that detailed written opinions will be expectedin all non-jury Category I and Category II cases. All written business court opinions should bepublished and made available to the public.

J. During the pilot period, written business docket opinions should not be required incases resolved by jury trials, but any jury verdicts, including a brief description of the verdict and thecourts written instructions to the jury, should be published and made available to the public.

K. During the pilot period, given the value of predictability and efficiency, the trialjudges are required to issue detailed written or oral opinions on summary dispositions, final

judgments, or other significant issues in the case. The oral opinions shall be transcribed immediatelyat court expense. All written or transcribed opinions as set forth above are to be publicly availableso that those opinions can be used as persuasive tools in future cases.

Note: The procedural mechanism recommendations for ADR, special procedural rules, andwritten opinions, are primarily based on a review of (1) the business court rules from other states(particularly Georgia, Maryland, North Carolina and New York); (2) the short-lived Michigan CyberCourt; (3) the local rules of the United States District Courts for the Eastern and Western Districtsof Michigan; (4) Oakland Countys Civil Early Intervention Conference Program; (5) the rules applicable toadministrative proceedings before the Michigan Public Service Commission; and (6) the MichiganCourt Rules (MCRs), particularly Rules 2.401 (pretrial procedures), 2.403 (case evaluation), 2.404

(selection of case evaluators), 2.410 (ADR), and 2.411 (mediation).

VII. BUSINESS DOCKET FUNDING UNDER THIS PROPOSAL A. Revenue. This proposal does not generate any direct revenue.B. Cost.


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1. This proposal does not generate any hard cost except the cost of transcribingcertain court proceedings. It merely reallocates cases that would otherwise exist amongjudges that would hold office and decide cases anyway. The six chief judges in each pilotcounty would have the ability to adjust dockets among judges so that the business docketwould not impose undue burdens on any judge.

2. If a circuit court were to send one or more of its business docket judges to atraining program sponsored by the American College of Business Court Judges, it wouldincur travel and lodging costs. However, this proposal does not require additional trainingof judges.

3. This proposal calls for the Michigan Supreme Court to write certainamendments to the Michigan Court Rules. Someone will have to perform that work, andthat could be considered a cost of this proposal.

4. Tasks will be added to the duties of various individuals at certain stages of acase. For example, the chief judge in each pilot county would have to consider whether thebusiness docket is creating undue burdens on various dockets. If a business docket judgeholds more frequent status conferences than in other cases, a court clerk may have to inputdata and print and mail a notice to the parties more frequently than in other cases. Requiring

a clerk to send an additional notice could be considered a cost.However, those theoretical costs must also be balanced against the savings of having

cases off the court docket sooner. The same clerk who must send an additional notice ofstatus conference early in a case may not have to send the trial notice that gets sent in othercases.

5. This proposal calls for an evaluation of the pilot program during and at theend of the three years. This could be considered a cost.

6. This proposal, in part, depends on the interest and willingness of businesscourt judges to perform possibly increased duties without increased compensation if therequirement of written opinions is imposed. If increased law clerk support is provided, thatwould be a hard cost.

At the same time, current business docket judges like it and want to continue doingit, extra duties notwithstanding.

7. This proposal calls for the use of existing technology requiring no additionalcost.

VIII. PHASED IMPLEMENTATION A. The business docket would be phased in and no pending cases would be reassigned

to a business docket judge.B. When new cases are filed, business docket cases would be assigned to the business

docket judge(s), who would also have other cases assigned to them so that each judge would have afull docket.C. Gradually, the mix of business docket cases for each business docket judge would

grow until the business docket judge has only business cases.D. An analysis showing the estimated cases that could be eligible for a business docket is

shown in Appendix B.


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IX. WHY BUSINESSES SHOULD SUPPORT THIS PILOT BUSINESS DOCKETPROPOSAL

A. No increased cost to them to be in the business docket.

B. Most likely to be acceptable to others because it has no cost.C. Business cases would be decided by a judge who has interest in business cases, casemanagement skills, and knowledge of business issues. Therefore, businesses will have increasedaccuracy, predictability, and reliability in decisions in their business cases as well as confidence thattheir cases will be handled in accordance with the rules and philosophy of the business docket.

D. Rules require both sides lawyers and the judge to get very involved in facts of thecase early so the case cannot languish.

E. Parties and judge are encouraged to eliminate issues early, explore early ADR, limitdiscovery, streamline procedures and deadlines, involve the client whenever possible, and ensure theearliest possible resolution at lowest cost to parties and court system.

Note: A minority of committee members felt that the committees recommendation should be to

implement a pilot standalone business court instead of a pilot business docket of the circuit court.The committee did not adopt this proposal, but provides it for reference in Appendix C, as it couldbe a model for expansion after the successful completion of the recommended pilot program.


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Appendix A

States with a Business Court of Specialized Business Docket

Based on the committees research, there are business and/or commercial courts, divisions, or

dockets in the following 17 states:

DelawareFloridaGeorgiaIllinois (Chicago)MaineMarylandMassachusettsNevada (Reno and Las Vegas)New HampshireNew JerseyNew YorkNorth CarolinaOhioOregon (Eugene)PennsylvaniaRhode IslandSouth Carolina

Efforts to study a business or commercial specialty court have occurred in the following states:

California

ColoradoMichiganMississippiWisconsin

Therefore, 34 percent of the states have implemented some form of a commercial and businesscourt specialized docket, and a total of at least 44 percent of the states have either implemented orstudied it as a possibility.


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Appendix B

Estimate of the Number of Business Docket Cases to be Handled

How business cases eligible for the business docket would be assigned to the judges

The number of business cases that would be heard in a business docket and how they would be handled bythe business docket judges in a circuit court is illustrated below:

Assume a circuit court has ten judges, including two business docket judges.

Day 1. Twenty cases are filed. None is a business court case. Each judge gets two cases assigned at random.

Day 2. Twenty cases are filed. Six are business court cases, three each to the business court judges. Thebusiness court judges each have five cases; the other fourteen cases are divided among the remaining eightjudges, who have either three or four cases each.

Day 3. Twenty cases are filed. Two are business court cases. Each business court judge gets one, so eachnow has six cases. The other eighteen cases are divided among the remaining judges, who have either six orseven cases total.

In other words, the business docket judges would be the only ones to handle the eligible business cases, and ifthere were not enough business cases to handle, the business docket judges would handle other general cases,so there would be no adverse impact on the caseload management.

Potential Estimated Case Impact for a Business Docket in the 3rd and 6th Circuit Courts(Wayne and Oakland Counties)

Case Filings in 2008 for AA (Agency), CB (Business Claims), CE (Environmental), CH (Housing and RealEstate), CK (Contracts), CP (Antitrust, Franchising, Trade Regulation), CR (Corporate Receivership), CZ(General Civil), and NZ (Other Damage Suits):

Total case filings for these case codes - 6th Circuit - Oakland County

AA CB CE CH CK CP CR CZ NZ Total39 43 12 948 3,142 18 8 1,466 171 5,847

Business-to-Business case filings - 6th Circuit - Oakland County (included in the above) AA CB CE CH CK CP CR CZ NZ Total

7 20 8 588 1,550 0 6 530 27 2,736

The percentage of business-to-business cases filed as a percentage of all applicable cases filed is approximately47 percent, and this line would be more likely to represent the number of cases that could be heard by abusiness court. Furthermore, the complexity of cases could be estimated by the number of days from thetime the case is filed until the case is disposed. Below is an analysis for all CK cases disposed of in 2009 inthe 6th Circuit:

Time from case filing to final disposition (6th Circuit All CK cases disposed of in 2009)

700 days or greater 500 days or greater 300 days or greater 100 days or greater0.6% 2.8% 21.4% 66.8%

Since the more complex cases take longer, the actual number of cases heard in a business docket could likelybe lower than the 2,736 noted above. For example, the more complex cases (300 days or longer) may


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represent only about 1,250 cases that might be heard in a business docket. An extrapolation of this dataapplied to the total case filings for Wayne County is shown below.

Total case filings for these case codes 3rd Circuit - Wayne County AA CB CE CH CK CP CR CZ NZ Total110 25 5 1,256 3,315 16 4 1,079 361 6,180

Using a factor of 47 percent that would approximate the number of business-to-business cases of this total,the number of potential business docket cases would approximate 2,904. Using the percentage (21.4 percent)of the elapsed time for 300 days or greater for the total number of CK cases disposed of in 2009 from the 6thCircuit study (that could represent the more complex cases), would result in an estimated caseload ofapproximately 1,322 cases.

Using this information above, and comparing it to the number of judges and cases in both Oakland andWayne counties, the following business docket caseload as a percentage of total applicable caseload isestimated:

Estimated caseload impact - 6th Circuit Oakland County:

Twelve judges in Civil/Criminal Division

Criminal and civil cases new filings (2008); 13,966 including 7,909 civil case filings (does not includedomestic relations, adult PPOs, juvenile, adoption, or misc. family)

New filings (2008) that could potentially have some probability of fitting into the business case definition estimated from 1,250 to 2,736 cases

Average new civil and criminal filings per judge: 1,164

Average potential new business docket cases per judge: 104 to 228

Estimated caseload impact - 3rd Circuit Wayne County:

Fourteen judges in Civil Division (does not include Criminal Division, Family Division Juvenile or Family

Division Domestic)

Civil cases new filings (2008) - 14,705(does not include domestic relations, adult PPOs, juvenile, adoption, or misc. family)

New filings (2008) that could potentially have some probability of fitting into the business case definition Estimated from 1,322 to 2,904 cases

Average new civil filings per judge: 1,050

Average potential new business docket cases per judge: 94 to 207

Because neither the total number of business docket cases nor the length of cases for the business docketunder expedited rules can be known in advance, the purpose of the pilot would be to gather conclusive dataon the business docket caseload and related statistics. It would appear that two business docket judges fromthe 3rd and 6th Circuit would be an appropriate starting point for the start of the pilot program.


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Appendix C

Minority Opinion Favoring a Standalone Business Court instead of a PilotBusiness Court as a Docket or Division of Circuit Court

1. The Supreme Court will designate what types of cases are subject to assignment to the MichiganBusiness Court (MBC). Should consider including some complex commercial criminalprosecutions. The former should be limited to cases involving sizeable damages (no less than$100,000 or, maybe, higher) or unique complexities or impact.

2. The Supreme Court to designate three to five circuits, not necessarily three to five counties, toparticipate in MBC-Pilot Project. Circuits should be selected for volume and diversity ofbusiness-type cases, political diversity and clout, and geographic diversity.

3. The Supreme Court to name at least five judges, active and/or retired (with a preference foractive judges), from any trial level court (circuit, probate, or district) anywhere in the state, toconstitute the MBC. It should solicit applications from judges and recommendations from thebench, the bar, and the public. Judges are to be chosen for their knowledge of business andbusiness law, case management abilities, and interest in handling business cases. Active judgeswill remain assigned to their courts with adjustments to their caseloads to accommodate theirMBC workload.

4. Unless the legislature provides otherwise, active judges assigned to the MBC will not receiveextra compensation, but will be reimbursed for mileage and expenses attendant to out-of-townMBC proceedings. Retired judges assigned to the MBC shall be paid the per diem allowed bycurrent law, as well as expenses.

5. The Supreme Court shall designate one of the MBCs judges as its chief judge. The chief judgeshall immediately convene the MBCs judges to make recommendations to the Supreme Courton policies and procedures for the MBC, and thereafter shall convene regular meetings of thejudges to monitor and coordinate the work of the MBC and make further recommendations tothe Supreme Court.

6. The Supreme Court will designate a person in the State Court Administrative Office (SCAO) asthe clerk of the MBC. That person will maintain an office in the Hall of Justice in Lansing to beknown as the Michigan Business Court Administrative Office (MBCAO). The MBC clerk shallborrow necessary support staff from SCAO. A separate office shall be maintained withdistinctive markings, a phone answered Michigan Business Court, MBC stationery, etc.

7. The costs of the MBC and MBCAO will be the responsibility of the Supreme Court, most likelyfrom the SCAO budget. Parties to MBC cases shall not be assessed extra fees.

8. A plaintiff filing a complaint in any Michigan circuit court believed to qualify for assignment tothe MBC shall note this on the complaint. The plaintiff shall also state the phone number forthe MBCAO, inform the defendant(s) that a call to that number will elicit the identity of theMBC judge assigned to the case, and state that a copy of any answer or other initial responsive


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pleading is to be sent to the MBCAO. A copy of the complaint shall be sent by the plaintiff(s)to the MBCAO upon its filing.

9. Upon receipt of a complaint, the MBCAO shall assign the case by lot to an MBC judge andpromptly notify the plaintiff, the clerk of the Circuit Court where the case was filed, and theassigned judge of his or her assignment. Upon receipt of copy of an answer, the MBCAO shallnotify defense counsel of the cases assignment to the MBC and the identity of the assignedjudge.

10.If a plaintiff does not designate a case as an MBC case and the defendant believes that it shouldbe so designated, the defendant shall state this on the answer in a format similar to that requiredof the plaintiff and shall send a copy of the answer to the MBCAO. The MBCAO shall assignthe case to an MBC judge and notify the parties of the assignment. The SCAO shall assign thejudge to the circuit court where the case was filed.

11.All fees required by the MCR or other law will be paid to and retained by the circuit court wherethe case was originally filed, unless venue is changed. Fees will be transferred as specified by the

rules governing changes of venue.

12.If a party disagrees with another partys designation of a case as an MBC case, that party may filea motion with the assigned MBC judge to cancel the MBC assignment. If such a motion isgranted, the case is to be returned to the circuit court in which it was originally filed for all futureproceedings, which are to be conducted by the judge assigned to that court in accordance withthe MCR.

13.When a case is sent to the MBCAO, an MBC docket number shall be assigned to the case and allsubsequent filings shall bear that number and the docket number assigned by the circuit courtwhere filed.

14.Cases sent to the MBC shall remain pending in the circuit court where filed, unless venue ischanged in accordance with any applicable rule. If venue be changed from one county toanother, the case shall remained assigned to the originally designated MBC judge, although allfuture proceedings are to occur in the court to which venue was changed.

15.The originals of all pleadings in an MBC case shall be filed with the circuit court in which thecase was originally filed. Copies are to be sent to the MBCAO and to the assigned judge.Electronic filing of copies is to be encouraged. The date of filing with the circuit court willdetermine compliance with any applicable deadlines.

16. As soon as a response is filed, the MBC judge shall schedule and conduct a telephoneconference with counsel for the parties to discuss management of the case unless the judge issatisfied upon reviewing the initial pleadings or deems that a face-to-face conference is necessaryfrom what is learned during the conference Proximity of the parties to the judges shall be afactor in considering whether such a conference is necessary.

17.Unless agreed otherwise by the parties or directed otherwise by the assigned judge, proceedingsin MBC cases, except trial and case evaluation, should be conducted by means of telephone or


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video conference. Such conferences shall be recorded by a stenographer, recorder, etc. All in-court proceedings shall be conducted where the case was filed. The assigned MBC judge willtravel there.

18.The scheduling of proceedings shall be done by counsel directly with the assigned MBC judge.The judges shall keep the MBCAO advised of all scheduling, so it can maintain a calendar ofdocket entries.

19.Assignment of a case to the MBC will not alter the parties respective constitutional rights to juryand non-jury trials.

20.All proceedings in the MBC shall be governed by the MCR and the MRE, except as the SupremeCourt directs otherwise. The judges assigned to the MBC are to be encouraged to aggressivelyuse MCR 2.401 to schedule discovery motions, etc.

21.Case evaluations shall be managed by the MBCAO using a list of evaluators compiled by it withemphasis on the selection of individuals with experience and skills useful for evaluating business

cases. The selection of evaluators for a particular case shall consider the proximity of theevaluators to the circuit court of a cases origin, but proximity shall not be dispositive. Only theusual fees shall be charged to the parties. The evaluators will be reimbursed the expenses of anyneeded travel.

22.The judges assigned to the MBC are to be instructed that written opinions are preferred for allrulings, except the most mundane, but that oral opinions from the bench are acceptable as longas they are detailed and inclusive of supporting authority and routinely transcribed.

23. Jury instructions given in MBC cases, except routine instructions, shall also be routinelytranscribed.

24.The MBCAO shall maintain a website containing the MBCs rules and procedures, all opinionsissued by its judges, including all transcribed oral opinions delivered from the bench, and alltranscribed jury instructions given in MBC cases.

25.The assignment of a case to an MBC judge shall continue for any post-judgment proceedings inthe trial court.

26.Appeals from decisions of the MBC shall be to the Court of Appeals in accordance with MCRwithout assignment to any special panels of that Court.

27.If the MBC judge assigned to a case is unavailable, even by phone, for any reason, the MBCAOis to assign the case by lot to an available MBC judge to act during the unavailability of theoriginally assigned judge, but only to handle matters which, in the judgment of that judge, cannotwait the availability of the originally assigned judge. If no MBC judge is available, the case is tobe handled temporarily by the judge of the circuit court to whom the case is assigned.


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Appendix D

Business Docket Frequently Asked Questions

The Business Impact Committee of the Judicial Crossroads Task Force proposes that the

Michigan Supreme Court designate two or three circuits for a three-year pilot business docketprogram in which disputes between businesses would be assigned to a business court judge.Following are some commonly asked questions about this pilot business docket and similar businesscourts, along with general answers.

1. Why should business cases be treated differently from other circuit court cases?Generally, lawsuits between businesses, especially large disputes, are different from other civil casesthat get filed in circuit court: (1) business litigants may have already engaged in fairly extensive fact-finding in an effort to avoid filing suit; (2) business litigants may already have participated in somekind of formal or informal dispute resolution process, with or without partial success, eithervoluntarily or because their contract required some kind of pre-suit proceeding; (3) commercialdisputes are litigated to verdict and through appeal so rarely that reported opinions on relevantprinciples of business law are sparse; (4) business cases, especially large ones, often involve multipleparties and very extensive motion practice, particularly on legal and technical issues; (5) casesbetween fictitious entities are more likely to raise unique problems related to locating individuals andelectronic discovery, for example, so expenses can be staggering and ordinary time limits may or maynot make sense; and (6) business litigants may want to continue to do business with each other,assuming the litigation process itself does not destroy the relationship.

The result is that business cases often require early and significant judicial intervention, andmay be ready for ADR much earlier than other cases. Therefore, they have the potential for earlyresolution and are particularly amenable to creative case management techniques.

Business cases are also more likely to take an inordinate amount of the judges time andattention. They often involve numerous legal issues, some novel, and the multiple motion hearingsand briefs place significant demands on the courts resources. Ironically, the dearth of reportedMichigan case law on business issues increases the burden on trial courts, which have to rely on out-of-state cases, treatises, etc. to resolve the myriad legal issues raised in business cases. Often, neitherthe litigants nor the court can look to any local decisions on principles of business law that areaccurate, consistent, and predictable.

2. How would assignment to a specialized business docket address those issues?The committee proposes that disputes between businesses, as defined in the proposal, be assignedby lot to one of two or three business court judges in each of the designated pilot circuits. The

business court judge would focus on: (1) very early, pro-active case management; (2) frequentjudicial intervention and consideration of ADR; (3) written opinions on significant issues, which arepublished and available as persuasive tools in future cases; and (4) use of technology to enhanceefficiency.

Business cases would be assigned to judges who have particular interest and expertise inboth case management and business issues. Judges would engage in early and frequent intervention


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with the goal of crafting a specialized plan for each case, evaluating ADR possibilities, resolvingissues, and moving the case toward conclusion. Judges would prepare written opinions, whichwould be published and available as persuasive tools, not just for that court, but for others as well.

Removing business cases from the general docket also frees other judges from the burdens

of the unwieldy commercial cases that clog the docket and divert resources from other cases.

3. How would cases be assigned to a business docket judge? Assignment to thebusiness docket may be mandatory or voluntary, depending on the nature of the dispute. A case onthe business docket will be assigned to a business judge by lot. The pilot business dockets will bephased in, so each business judge will continue to carry a full case load throughout the pilot period.

4. How much would the pilot business docket cost? The focus of the business docketis reallocating existing cases among existing judgeships; it does not require any new judicial positionor new funding. The only cost in the proposal is the cost of transcribing significant decisions tomake them available to the public.

5. Will the pilot business docket project be evaluated? The committee is proposingthat the pilot project be evaluated on an ongoing basis, with a comprehensive report at the end ofthe pilot period.

6. What do businesses think of business courts? Nationally, general counsel andbusiness lawyers overwhelmingly support the formation of some form of business court or docket.The State Bar of Michigan recently conducted a survey with similar results.

Establishing a business docket may not, in itself, persuade a business to locate or remain inMichigan. However, it is one way to demonstrate to the business community that Michigan issensitive to the interests of its constituents, including businesses.

7. How will the business docket affect the rest of the judicial system? Assigningbusiness cases to a business docket will not just improve resolution of those cases. The entirejudicial system will benefit. The cumbersome commercial case that otherwise clogs a judges docketcan be reassigned to the business docket, freeing the judge to handle perhaps several other mattersin place of that one. The business judge will be encouraged to experiment with a variety of casemanagement techniques that may ultimately prove useful in other cases. Business issues willcertainly arise in cases not assigned to the business docket. Other judges will be able to consult abody of trial court opinions when deciding those issues.

8. Why is $25,000 the recommendation for the jurisdictional threshold for the

business docket? There was considerable debate within the Business Impact Committee on theissue of the jurisdictional amount required for cases to be assigned to the business court. There wasa division of opinion on a low versus high jurisdictional minimum. The discussion aligned along twolines. While there were other concerns, those favoring a low jurisdictional amount were primarilyconcerned with (1) access to the business court, (2) business elitism, and (3) forum shopping.

On the other hand, those favoring a high jurisdictional amount were mainly concerned with (1)


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overburdening a business court with too many cases if the amount were set to low, (2) maintaining abusiness rather than consumer focus of the court, and (3) dilution of the seriousness purpose for thecourt.

A strong majority of the committee favored recommending that the jurisdictional amount incontroversy be the same as the circuit court, which is presently $25,000.


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Business Impact Committee Proposal

Changes to the Rules for Licensing Attorneys

From other States and Countries

The Business Impact Committee has been charged with making recommendations

relating to the desirability and effectiveness of Michigan Courts regarding business

disputes. Although part of the "audience" is the current business community of Michigan,another increasingly important part of the "audience" are businesses located in other

jurisdictions and in the global economy. Most jurisdictions, including Michigan, have

not comprehensively addressed the full potential of sanctioning and facilitating the multi-

jurisdictional practice of law by lawyers representing outstate businesses andmultinational corporations.

The rules and policies that regulate attorney licensing for attorneys from other states andcountries need to be streamlined. The red tape for licensure needs to be reduced to allow

easier entry for out-of-state and out-of-country attorneys with significant experience who

are seeking to practice law in Michigan on behalf of their business employers.

There are two classes of lawyers for which rule changes are needed.

1) Rule changes for lawyers who are licensed in states other than Michigan butwho are working for business firms doing business in Michigan.

Currently, a lawyer in this situation can practice in Michigan for a limited number of

occurrences within a one-year period under thepro hac vice rules codified in MCR

8.126. In addition, a lawyer in these circumstances may be admitted as an activemember of the State Bar of Michigan through the procedures provided in Rule 5 of

the Board of Law Examiners, which codifies MCL 600.946 and which provides for a

special certificate that allows an outstate attorney to practice law in Michigan aslong as the attorneys only client is his or her employer. The certificate is good only

for as long as the attorney- employee stays with that employer. What is needed is a

change to the current rules to allow attorneys with special certificates to changeemployers without significant additional paperwork. Implementation must also

facilitate the issuance of special certificates to non-Michigan attorneys who transfer

to Michigan to hold in-house positions. The procedure should be made easy when the

lawyer will limit activity only to work for that employer and without court


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appearances. Such admission could be facilitated after a criminal and ethicsverification of the applicant.

A more dramatic approach would be to broadly open admission to the Bar to anylawyer working in Michigan for a corporation, provided the lawyer is already

properly licensed in any other state of the United States and so long as the lawyerspractice is limited to work as an attorney on behalf of his or her employer. Therecould also be consideration of a requirement that the attorney and the attorneys

employer maintain an appropriate level of liability insurance.

2) Rule changes for lawyers who are licensed from countries other than theUnited States who are working for firms doing business in Michigan.

A foreign lawyer can be admitted as an active member of the State Bar of Michiganthrough Rule 5 of the Board of Law Examiners as a Special Legal Consultant,

which allows the attorney to render professional legal advice on the law of the foreign

country where the legal consultant is admitted. There is, however, ample room forstreamlining of the licensing process. Moreover, currently there is nopro hac vice

rule applicable to lawyers who are not licensed in the United States or, stated

otherwise, who are licenses in jurisdictions outside of the United States. One is

needed that is that is applicable to an international attorney working for aninternational company doing business in Michigan, so long as the attorneys only

client is his or her employer.

Recommendation

The Committee recommends that Rule 5 of the Rules of the Board of Law Examiners be

revised to accommodate outstate and foreign lawyers working for corporations in

Michigan. In todays day and age, when corporations are increasingly involved innational and multinational enterprises that readily and seamlessly cross state lines and the

borders of countries, it makes sense to reconsider current licensing paradigms that are

outdated and based on models that existed before the age of the Internet and overnightexpress mail.

Documents

State Bar of Michigan Judicial Crossroads Task Force BusIness Impact Committee Recommendations 2011